Monday, September 17, 2012

Deputy Treasury Secretary Anthony Yauieb on the PNG State-Owned Enterprises report

Opening Remarks on the occasion of the launch of the PNG SOE Benchmarking Report by Anthony Yauieb

Treasury Deputy Secretary (Economic and Financial Policy)
Thursday, September 13, 2012
Crowne Plaza Hotel
Distinguished guests, ladies and gentlemen,

It is my privilege to offer a few remarks on behalf of my Secretary on this occasion of the
launching of the PNG SOE Benchmarking report.
Anthony Yauieb

Our SOEs play an important role in the provision and delivery of the essential services that contribute to economic growth and the achievement of the development goals of this country. 
Such services include water, power, telecommunications, and port and airline services. 
At the same time, SOEs are key State assets therefore the Government expects a return on its investment.
I have had the benefit of skimming through the PNG SOE Benchmarking Report and we will take time to digest and carefully consider some of the report’s findings on how certain policy, legal and regulatory areas could be reformed to improve SOE’s delivery of infrastructure services.
We will look forward to this report as a resource that we can draw upon as we progress our
own SOEs reform agenda. 
This is particularly important for SOEs to be competitive whilst making positive contributions to the economy by improving service delivery and providing a reasonable rate of return to the state as a shareholder. 
For SOEs, it is now time to start thinking about different ways of doing business to achieve better results if current systems and processes do not allow us to perform better.
Over the past years, the PNG Government has recognised the need to improve the performance of its SOEs. 

This has provided impetus for the Government to increase its assistance to SOEs, both in terms of capital injection and important SOE policy reforms to lift their performance.

Although the pace and the extent of the policy reforms have been slow due to varying political commitments of successive governments, the reality is that the benefits are encouraging for our growing economy. 
We need to build on from this and start thinking about better and innovative ways of doing business.
As detailed in the 2012 Budget Paper, the SOE policy framework has shifted significantly since late 2011.
The Budget identifies a number of key SOE reforms – a Dividend Policy setting out the government’s expectation as a shareholder for the SOEs; a Community Service Obligation (CSO) policy framework to ensure SOEs operate commercially and deliver CSOs without undermining their commercial principles, the development of a Public Private Partnership (PPP) legislation to complement the existing and planned Public Private Partnership arrangements; an On-lending policy tries to ensure that the SOEs are treated similarly to private sector borrowings through appropriate risk sharing between State as the shareholder/lender and SOEs as borrowers.
As stated earlier, the Government, like any shareholder, expects a commercial rate of return on its investments. 
To avoid confusion, it is critical that the Government clearly communicates its expectations of, and clarifies the policy settings for, the public enterprises and its commercial investments.
A key aspect of the policy settings involves communicating that the Government expects SOEs to operate as commercial and professionally-managed businesses. 
Consistent with this primary objective, they should be as profitable as a comparable business not owned by the State.
The Government will reflect this desire that public enterprises operate with a commercial focus via the finalisation of Dividend, Community Service Obligation (CSO), Public Private Partnership (PPP) and the On -lending policies in 2012.
We successfully completed the PPP Policy in 2008 while the On-lending policy has been finalised in 2011. 
We are now focusing on finalising the Dividend and CSO policies (in close consultation with IPBC). 
The draft PPP law has been finalized and will be submitted to Parliament during the Budget session. 

Over the past 12 months, the Government has made substantial progress in increasing the
transparency with which the SOEs and IPBC are managed.
 As ADB's Finding Balance Study has found, PNG has gone from having one of the least transparent SOE governance and accountability frameworks in the Pacific to one which is increasingly robust, with the preparation of annual plans and publication of IPBC accounts.
 We look forward to seeing a continued increase in transparency and accountability.
We still have much more work to do in order to place our SOEs on a fully commercial footing, and Treasury is pleased to see that IPBC's business plan for 2012 reflects the same priority actions: 

  •   Ensuring compliance with the planning and reporting requirements contained in the IPBC Act;

  •  Establishing stronger links with the Independent Competition and Consumer Commission (ICCC) in the defining and enforcing service standards and financial performance outcomes for relevant SOEs;

  •  Publicly reporting on service standard outcomes and financial performance of SOEs;

  •   Reviewing and reporting on opportunities for greater private sector involvement through mechanisms such as Independent Power Producers (IPPs), PPPs and possible divestment of shares in public enterprises; and

  •  In consultation with Treasury, contribute to the finalisation of the CSO and dividend policies for government consideration.

In conclusion, I would like to thank ADB for its quick response to our request and for conducting this SOE Benchmarking Study. 
Let me also not neglect to thank AusAid for the co-funding for this study.
I would also like to thank the ADB for their ongoing efforts to help us finalise the CSO policy and PPP legislative framework, both of which will be vital to improving the quality of our infrastructure service delivery and financial performance of our SOEs. 

1 comment:

  1. We must be wary of so-called Professional Financial Institution's Report.
    They can be doungle edged swords for their own interests.

    For this's simple. CRAP.

    What a load of dung Report ( )by Asian Development Bank on the performance on State Owned Entities (SOE) in PNG.

    Some of these SOE's have declared profits in last two years with better financial standing.

    Air Niugini is our national pride and flag carrier. They are offering some very good rates now. They did declare some profit too this year.

    Telikom is the only Telecommunications company in PNG who took the risk to invest in the two international submarine fiber cables linking to Sydney and Guam. Their Internet speed and rates are the best in PNG - see today's school plans on the Post Courier- effectively as low as 0.0375 toea per MB.

    They also declared profit last year after years of politicisation by the Government for years.

    PNG Ports must be the only gateway to PNG's trade routes. It must never be sold through some disguised shoody report.

    A number of these SOE's are operating in a fully deregulated market with foreign competitors who are hungry for markets in third world countries.

    The Government, through IBPC has strict financial commitment guidelines.
    IPBC expects them to chase the IPBC Board and the Ministers for every K1 Million Capital Expenditure Commitment. Most of the time, the Board and the Ministers are busy and no approvals are granted on time.

    During this time, the foreign competitors (mostly funded by ADB, The World Bank, IMF etc) are rolling out their business plans, taking away the customers and market share. Very cunning business advisors with two dirty hands.

    How does the idiotic IPBC and its State Owned Enterprises Minister, expect these local companies to perform when their hands are tied?

    You guys are actually sponsoring SOE dis-intergration and take overs by foreigners who are smart - giving advise you to you all in one hand and taking over the market on the other hand.

    These foreign financial institutions know the trade and tricks around these things.

    Sir Mekere's going finish message was in fact an insult.

    PNG, please hurry up and sell all the Gold, Timber, Fish, Open all all Ports and airports and even the SOE's and let the big boys own everything.

    It's about time, PNG politicians and local advisors grow some spine and tell these double-handed foreign financial institutions like the World Bank, ADB and IMF to get lost with their conniving and thefts.

    Malaysia did this.

    There are enough professional local Papua New Guineans who can run these companies. Please give them a target to perform and take your dirty hands off their backs. They're trained in the same universities and colleges that some of these foreigners have been to.

    Please cut these crap about listening to whitemen and foreigners all the time. About time, we learn to trust our own sons and daughters, because, there's a time coming soon in which there will be nothing in PNG to entrust the local Professionals who are trained and who know how to do these things.

    Let's not rush to get recycled old expatriates to come and take over all higher Management jobs like we are seeing with BSP nowadays!